Financing with a twist

More groups explore how Pay For Success financing can help kids

After bursting onto the national scene a few years ago, Pay For Success financing is gaining traction among Colorado school districts and early childhood organizations.

The Early Childhood Council of Boulder County and Adams County School District 50 are both exploring the British-born financing mechanism as a way to pay for underfunded early childhood programs. Aurora Public Schools may use the model as well, to beef up college and career readiness.

The exploratory work by all three groups unfolds as state law-makers consider Pay For Success legislation for the second year in a row. Last year’s bill, which was introduced late in the session and focused exclusively on early childhood programs, died in committee.

Chalkbeat reporting on PFS

Pay For Success resources

Common PFS focus areas 

  • Early childhood
  • Recidivism
  • Chronic homelessness
  • Juvenile Justice
  • Asthma

The idea behind Pay For Success, or PFS, is that private investors or philanthropists pay upfront for evidence-based social programs. If those programs save public money by preventing costly interventions such as emergency room visits or special education services, the investors are repaid with interest.

The potential savings accrued from Pay For Success projects are calculated by comparing the public costs of an individual or group after an intervention program to the public costs of an individual or group with no intervention.

For example, a school district considering a preschool-based Pay For Success project might use national studies showing that high-quality preschool reduces special education enrollment by 15 percent, to estimate its prospective savings.

If for some reason a Pay For Success project doesn’t yield the hoped-for savings, the investors lose some or all of their money. Therein lies part of the appeal of Pay For Success. While it can inject new funding into effective prevention programs, there is relatively little financial risk to the public entities that stand to benefit from those programs long-term.

When it comes to projects targeting children and youth, the Early Childhood Council of Boulder County is farthest along in the complicated development process. (Among all Colorado projects, a Denver effort to address chronic homelessness among adults is closest to fruition.)

The council is studying the possible expansion of a 30-year-old home-visiting program—the “Community Infant Program”—that aims to prevent child abuse and neglect. If the current cost-modeling work shows an expansion is feasible, the project could launch in 2017 with an five-year investment of $2-4 million. It’s not yet clear who the project’s investors would be.

“We’re not seeing any yellow or red lights. They’re all green,” said Bobbie Watson, executive director of the council.

Growing school district interest

In the last few months, local school districts have also begun testing the waters of Pay For Success. Both Adams 50 and Aurora have applied for grants through the University of Utah Policy Innovation Lab, one of a several intermediary organizations distributing federal dollars to build PFS capacity. The grants of up to $250,000 would primarily pay for new in-house employees to help develop PFS projects in each district.

Adams 50 is also an alternate finalist for a grant through the Boston-based Third Sector Capital Partners, another intermediary for Pay For Success capacity-building grants.

The two districts’ bid for such funding speaks to one of the biggest challenges facing organizations interested in the Pay For Success path: the need for money and expertise long before a project launches.

“This is the big problem with PFS right now,” said Mary Wickersham, a consultant working on the Boulder project. “There’s this dearth of funding on the front end.”

While Watson and her team raised around $150,000 to cover those costs, it’s not easy.

Of the more than 40 Pay For Success proposals received in response to a state “Request For Information” in 2013, only two–Denver’s chronic homelessness project and Boulder’s home-visiting project–are actively moving forward.

Dozens of others, “some portion of which could be great deals … are kind of languishing right now for want of support to get them to the finish line,” said Wickersham.

Preschool potential

Following in the footsteps of school districts in Chicago and Salt Lake City, Adams 50 is considering a PFS project that would expand preschool access. Specifically, the district and two community partners, Growing Home and the Early Childhood Partnership of Adams County, want to increase the number of full-day preschool slots in the district and add parenting classes.

The hope is that such a PFS program would decrease special education costs and improve early reading scores, said Mat Aubuchon, director of early childhood education in Adams 50.

“I think it’s exciting: a potentially totally different kind of funding stream in [early childhood education],” he said.

While half-day preschool is relatively accessible in the district, Aubuchon said there are very few state-funded full-day slots and most families can’t afford to pay for it out of pocket. Three-quarters of the district’s students are eligible for free or reduced-price meals, a proxy for low-income status.

The district and its partners are just starting to hold meetings on Pay For Success with potential investors in the philanthropic community, said Aubuchon. The earliest any project could launch is the 2016-17 school year.

“Obviously, we’re at the very infancy state of even exploring something like this,” he said.

Creating a college-bound culture

Meanwhile, Aurora Public Schools, in partnership with the Aurora Public Schools Foundation, is looking at Pay For Success with an eye toward improving outcomes for older kids.

Borrowing a concept used in Denver schools, the project under consideration would establish “Future Centers” in district high schools where students would get advising on all matters related to college and career readiness. The goal is to strengthen the district’s college-bound culture, decrease drop-out rates, and reduce the need for remediation.

“There’s some really clear metrics of deliverables” around post-secondary readiness, said Cheryl Miller, the district’s assistant director of grants and federal programs. “It perfectly aligns to our new strategic plan.”

Among the state’s 15 largest school districts, Aurora had the lowest on-time graduation rate last year: 55.9 percent. Statewide, 77.3 of high school students graduated on time.

Miller said the district initially considered a preschool-based PFS initiative, but wanted to differentiate itself by trying something outside the early childhood arena.

The goal was to be “doubly innovative,” she said.

More money for mental health

The Early Childhood Council of Boulder County began exploring Pay For Success in late 2013. Intent on using the model to make a positive impact on the youngest children, the council looked at six home-visiting programs already operating in the county.

“My board has particular interest in the birth to three population,” said Watson. “That’s where you get your best return on investment.”

The Community Infant Program, in which nurses and psychotherapists work with families around mental health, rose to the top of the list.

“We have a 30-year track record and I think people were pretty excited about the longevity in the community,” said Program Director Janet Dean.

The program, which has 20 employees and an annual budget of $1.5 million, helps parents create healthy relationships with their babies by addressing issues ranging from post-partum depression to anger, stress and mental illness.

Absent such intervention, children may experience abuse or other types of toxic stress that have long-term consequences on their health, education and well-being. There are financial consequences too, often incurred by the public sector. These can include expensive hospitalizations, court proceedings or entry into the foster care system.

If the number-crunching underway now confirms expectations, Pay For Success funding represents a front-end investment that could defray those back-end costs.

Dean said there are usually 20-30 families waiting for services from the Community Infant Program. An expansion would allow the organization to better serve families in the mountains on the west side of the county and those around Longmont, Lafayette and Louisville.

“We have families waiting for our service,” she said. “Mental health is just not funded, in general, to the level it needs to be funded.”

intent to apply

Five groups may present charter applications this year to open in Aurora

PHOTO: Denver Post file
Mauricio Jackson, from left, Raymond Hurley and Adrian Rocha sit in the gym at University Prep charter school before loading on the bus for the ride home.

Five groups have signaled their intent to apply to open a charter school in the Aurora school district.

Based on the letters of interest, which were submitted last week, the five possible applications that Aurora could see this year include one high school, a Denver-grown charter school, and one tied to a national charter management organization.

Groups are required to submit a letter of intent a month before they submit a full application. In Aurora Public Schools, the deadline for applications is March 9.

District officials and two committees would review the applications that are submitted and present a recommendation to the Aurora school board before a vote in June. The earliest schools would open would be fall 2019.

Last year the district received only one application from a charter network that was invited to apply. That was for a DSST school, the high-performing Denver charter network, that is approved to open its first Aurora school in the fall of 2019. Based on this year’s letters of intent, there could be five applications.

Denver-based charters have started to express interest in moving to the suburbs as the low-income families they serve leave the city and as the Denver district slows the pace at which it seeks new schools. The national network KIPP is one charter network looking at possible suburban locations, though KIPP leadership won’t make a decision until this summer about where and didn’t submit a letter of intent to Aurora this round.

Here is a look at each of the five proposed schools with links to their letters of intent:

budding issue

Aurora superintendent says no to charter school locating near marijuana shop

Students of Vega Collegiate Academy in Aurora, Colo. Photo provided by Vega Collegiate Academy.

Update: The State Board of Education on Feb. 15 dismissed an appeal from Vega Collegiate Academy and told the school to go through the mediation process outlined in its contract with the district.

A charter school looking to move out of a church basement as it expands into more grades next year has halted its plans after the Aurora school district rejected the school’s desired location — near a pot shop.

City and district officials say it’s the first time the issue has come up in Aurora since marijuana retail businesses began opening in the fall of 2014.

State law prevents marijuana stores from opening within 1,000 feet of a school, but it doesn’t address schools opening near existing marijuana businesses. Vega Collegiate Academy’s contract with the district states the superintendent must approve any relocation. In this case, he didn’t.

Vega officials had already spent $40,000 on traffic studies, building plans, and deposits for the space at Colfax and Galena, about a mile from its current location in a church in northwest Aurora. Many parents had seen some plans and were excited about the expansion and larger space that might allow for more programming such as yoga or art.

Charter school officials appealed the denial – first to the school district and now to the State Board of Education. The final purchase of the site, and the remodeling that would have had to taken place to have students move in this fall, are on hold.

Kathryn Mullins, the founder and executive director of Vega, told the school board last week that the denial sends a bad message to the school’s students.

“Your denial of our space has told our children and families that it’s O.K. to live there, just not to go to school there,” Mullins said. “That is unacceptable.”

Because of the pending legal challenge, Aurora Public School officials said they would not comment on the denial. But in a letter to the school, Superintendent Rico Munn said the location – 300 feet from a marijuana dispensary – raises concerns. In trying to reconsider his decision, he noted he reviewed parent support letters, maps, crime data, and research about crime near marijuana dispensaries.

“I continue to have concerns,” Munn’s letter states. “I have not found anything to change my original denial.”

Vega school officials said that finding a location for the school was “a Herculean accomplishment in Colorado’s tight commercial market,” according to appeal documents.

The proposed building, a three-story retail building most recently housing a barber shop, is next to a Dollar General and was attractive in part, because it is close to where families of current students live and because of the large size.

“Our children deserve to go to a quality school close to their home,” Mullins told the board. “Our children and families should not be punished because of where they live or what facilities currently exist in our community.”

Proposed location at 10180 E. Colfax Ave.

Vega opened in August, enrolling almost 100 kindergarten and fifth graders. The plan is to expand by two grade levels a year until the school serves kindergarten through eighth grade. A high percentage of families in the northwest Aurora area live in poverty — a population Vega officials want to serve.

The proposed school site on Colfax has an entrance in the back that opens south onto a parking lot so that students would not have to enter from Colfax. An alleyway connects the parking lot to a strip mall with a Starbuds dispensary whose entrance faces west.

Reached on Friday, Brian Ruden, one of the owners of the Starbuds pot shop, said he was not aware of the possibility of a school relocating there.

In Denver, analysis done by the city and by the Denver Post in 2016 found more than 20 schools that are located within 1,000 feet of a marijuana store. In most cases, the schools moved in after the marijuana shop.

DPS officials did not respond to a request for comment about how they make decisions for school locations near marijuana shops.

The connection between crime and marijuana has been contentious and definitive evidence does not exist.

The 1,000-foot buffer was created by the state in 2012 after federal officials sent letters to medical marijuana shops informing them that they would enforce federal drug laws near schools. Federal prosecutors have generally followed a policy of not going after businesses that follow state law, but it’s not clear how aggressive the current administration will be on imposing federal enforcement in states that have legalized marijuana sales.

Vega employees, parents, and community members also spoke to the Aurora school board Tuesday about the decision. Mullins, the founder, said more than 200 parents, employees, and community members packed the board meeting, many with signs in support of Vega’s relocation. Thirty-five people signed up to speak, but because of the lengthy list, the school board limited the speakers to four.

“It would be very close to my home and so would make life a lot easier for me as an older person raising kids,” one grandmother told the school board.

The woman, who said she has lived in the neighborhood for decades, said she knows the area has a bad reputation, but said locating a school in a building that has often been empty could help change that.

Another mother, Arely Suarez, who said her fifth-grade daughter attends the school, told the school board in Spanish that the students need the bigger space.

“The kids have a right to a good education,” Suarez said. “As far as the marijuana dispensaries, this is a factor at the state level, it’s not just a factor that is affecting the Aurora school district.”

The legal challenge the state must first consider is whether it has jurisdiction for the appeal. Vega officials asked for the appeal, saying the district is imposing unreasonable conditions on the charter school.

But the Aurora district argued in filings that they have authority over the decision. The filings state the state board does not have jurisdiction because the superintendent, not the Aurora school board, made the decision, and because the dispute is not an unreasonable condition. The district argues the charter school should first remedy the conflict according to a process outlined in their contracts that would include mediation.

Either process could stretch out for months.

This story was updated to reflect more accurate information about the building.